In the holiday-shortened week ending Sept. 9, mortgage application activity increased 6.3% in response to record low mortgage rates.
According to the Mortgage Bankers Association (MBA), both the Refinance and Purchase Index recorded modest gains of 6.0% and 7%, respectively, to ~3359 and ~171.
As a percent of applications, refinancing share ticked slightly higher to 77.3% from 77.1%.
The 30-year and 15-year fixed contract rate reached their lowest level in the survey's history, the MBA reported. The 30-year rate averaged 4.17%, down six basis points, while the 15-year rate slipped one basis point to 3.40%.
Despite record low mortgage rates, the Refinance Index remains well off previous responses. As mortgage rates dropped to their previous record low of 4.15% in mid-August, the index reached 3916, which is the highest the index has been this year, and last fall with rates heading toward 4.17%, the index held between 4000 and 5000.
The muted response is a result of a smaller universe of available borrowers eligible to refinance as many have previously taken advantage of low rates. Other reasons are ongoing tight credit conditions, capacity constraints at mortgage bankers that is keeping the primary-secondary spread on the wider side, poor home valuations, conservative appraisals, and the uncertain economic and jobs environment.
It will likely take changes/expansion of Home Affordable Refinance Program or HARP for refinancing to pick up.